Press releases | PJSC Uralkali

Uralkali’s Board of Directors approved a number of decisions aimed at the reduction of Uralkali’s indebtedness and recommended to delist the Company's shares from the Moscow Exchange

08.11.2017

Uralkali (“the Company”, Moscow Exchange: URKA), one of the world’s largest potash producers, announces the decisions of its Board of Directors taken at a meeting held on November 7, 2017.

Having considered that in June 2017, following the reduction of the Company’s free-float from 27.8% to 5.23%, the Company’s shares were downgraded from Level 1 to Level 3 quotation list of the Moscow Exchange, and taking into account the reduced volume of trading in the Company’s shares on the stock exchange, the Board of Directors unanimously recommended to the Company’s shareholders to approve the delisting of the Company’s shares from the Moscow Exchange and called for an extraordinary general shareholders’ meeting (the “EGM”) in the form of absentee voting to be held on December 18, 2017. November 23, 2017 was set as the date of identification of the persons entitled to participate in the meeting (the “Record Date”).

In addition to the delisting, the agenda of the EGM will also include other matters, including the increase of the charter capital of the Company by way of issuance of 150,000,000 non-convertible preferred shares, which will be placed by way of “closed subscription” to major shareholders of the Company at a price, which will be determined by the Board of Directors prior to the offering, and the approval of the corresponding amendments to the Company’s charter.

The funds raised from the placement of the preferred shares will reduce the Company’s indebtedness. However, taking into account the current financial and economic situation and the requirements of the current dividend policy, the Company does not expect to pay dividends for 2017. In the future, owners of the preferred shares will have a priority right to dividends. Accordingly, the Company will only be able to pay dividends on common shares following the payment of dividends to owners of the preferred shares.

The agenda of the EGM will also include the cancellation of the previously approved decision on the Company’s reorganisation by way of merger of the Company’s wholly-owned subsidiary, JSC Uralkali-Technology, into the Company. As previously disclosed by the Company, it may not be possible to complete the reorganisation in the near future, and it is therefore proposed that the shareholders approve the cancellation decision.

Materials on the proposed amendments to the Company’s Charter in connection with the issuance of preferred shares, as well as other materials for the EGM, will, in accordance with applicable legal requirements, be made available on November 17, 2017 and posted at: www.uralkali.com.

In accordance with Article 75 of the Russian Federal Law On Joint Stock Companies, shareholders of the Company who vote against the filing of the application to delist the Company’s shares, or the proposed amendments to the Company’s Charter in connection with the preferred shares, or the cancellation of the previously approved reorganization, or do not participate in voting on any of these items, will have the right to request full or partial redemption of their common shares by the Company, subject to applicable Russian law. A more detailed description of the redemption procedure and the exercise of the redemption rights by the shareholders and the owners of global depositary receipts representing Company’s shares is set out in the Annex hereto.

As part of the general strategy to reduce the Company’s indebtedness, the Board of Directors has supported the proposal to sell 10% of the Company’s shares held by the Company’s 100%-owned subsidiary — JSC Uralkali-Technology. The shares will be sold to a strategic shareholder of the Company — URALCHEM, JSC at a market price. The funds raised from the sale of such quasi-treasury shares will reduce the Company’s indebtedness.

ANNEX

Shareholders’ right to request redemption of their shares

As set out above, in accordance with Article 75 of the Russian Federal Law On Joint Stock Companies,
shareholders of the Company who vote against the filing of the application to delist the Company’s shares, or the proposed amendments to the Company’s Charter in connection with the preferred shares, or the cancellation of the previously approved reorganization, or do not participate in voting on any of these items, will have the right to request full or partial redemption of their common shares by the Company, subject to applicable Russian law. Only shareholders who owned the Company’s shares as at the Record Date and voted against any of the above items or did not participate in voting on any of these at the EGM will have the right to request that their shares be redeemed, subject to the limitations set by the law.

The Company may not spend more than 10% of the value of its net assets (calculated in accordance with Russian Accounting Standards) as at the date of the EGM to redeem its shares. Accordingly, the Company may repurchase only a limited number of its shares. In the event that shareholders request the redemption of more shares than the Company is permitted to redeem, shares submitted for redemption will be redeemed on a pro rata basis. A shareholder may not tender for redemption common shares in excess of the number of common shares that such shareholder held as at the Record Date.

The redemption price of one share was determined by the Board of Directors as 135.95 rubles per share. The Board of Directors has set the redemption price taking into account the valuation of the market value of one common share of the Company prepared by an independent appraiser and the volume-weighted average price of a Company’s share determined based on the results of organized trading during a six-months period preceding the date of the decision to convene the EGM, which constitutes 135.95 rubles per share. All payments in connection with the redemption will be made in Russian rubles.

In accordance with Russian law, shareholders will have the right to request the redemption of their shares or withdraw their requests within 45 calendar days from the date of the EGM. Withdrawal requests may only be made in respect of all, but not part, of the shares which were tendered for redemption.

Requests for redemption and withdrawals of requests for redemption of the Company’s common shares recorded in the Company’s share register will be required to be delivered to the Company’s share registrar, VTB Registrar (hereinafter the “Registrar”), at: Russian Federation, 127015, Moscow, 23 Pravdy Street, or to the address of any of the branch offices of the Registrar, details of which can be found at: http://www.vtbreg.com/company/regional.

Requests for redemption and withdrawals of requests for redemption of the Company’s common shares recorded with the institutions having the right to record the rights attached to the Company’s shares (as defined under Russian law), including relevant Russian depositaries, must be submitted to such institutions sufficiently in advance, so that the relevant institution were able to deliver such requests to the Registrar within 45 calendar days following the EGM. Forms of requests (instructions) for redemption, and withdrawals of requests for redemption of the Company’s shares recorded with such institutions, along with the instructions for completion of such requests (instructions) can be obtained from such relevant institutions.

Upon receipt of a redemption request, the Registrar or the Russian depositary (nominee holder), as applicable, will block the shares in relation to which such request has been received, and the shareholder requesting redemption will not be able to dispose of, transfer, pledge or otherwise encumber such shares, unless a withdrawal of the redemption request has been submitted by the relevant shareholder to the Registrar or the Russian depositary (nominee holder), as applicable, within 45 calendar days following the EGM.

Redemption requests and withdrawals of such requests will be considered submitted to the Company as of the date of their receipt by the Registrar either directly from shareholders or through the relevant Russian depositaries (nominee holders).

Pursuant to Russian law, the Company must repurchase the shares submitted for redemption (within the limits set by the law) within 30 calendar days from the expiry of the period for the submission of the redemption requests. All shares accepted for redemption are expected to be transferred to the Company upon completion of payment for the shares tendered for redemption.

Further information in respect of the redemption procedure will be set forth in the notice on convening the EGM, which is expected to be published on November 17, 2017.

GDR holders will be able to request redemption of the common shares represented by their GDRs only if they (i) surrender and cancel all or part of their GDRs representing the number of common shares they wish to have redeemed and take delivery of the relevant number of common shares represented by the GDRs by the close of trading on the Record Date and (ii) vote against the filing an application to delist the shares, or the amendments to the Company’s Charter in connection with the preferred shares, or the cancellation of the previously approved reorganization, or do not participate in voting on any of these items at the EGM. Surrender of the GDRs is subject to the payment of the relevant fees to The Bank of New York Mellon (the “GDR Depositary”) and other provisions of the Deposit Agreement between the GDR Depositary and the Company, dated August 15, 2006, as amended by supplemental agreements dated July 27, 2011 and August 25, 2015 (the “Deposit Agreement”).

The terms and conditions governing the share redemption, including the form of payment, timing, limitations and other requirements set forth above, will also apply to GDR holders who surrender their GDRs and receive common shares as provided in the preceding paragraph.

GDR holders should keep in mind that the delivery of the Company’s common shares represented by the GDRs upon the surrender and cancellation of the GDRs may take at least 10 Russian business days. This period does not include the time necessary for the opening of a securities account for the receipt of the common shares represented by the GDRs. GDR holders may also need to open a Russian ruble account with an authorized Russian bank for the receipt of payments for the common shares accepted for redemption.

Neither GDRs nor any other financial instruments, other than the Company’s shares, will be accepted for redemption.

The information related to the cancellation of the GDRs can be obtained from the GDR Depositary.

All steps required to cancel the GDRs and receive common shares represented by the GDRs must be completed in a timely fashion so that the common shares are delivered to the GDR holder’s common shares account by the close of trading on the Record Date.

GDR holders whose common shares will be recorded with the securities accounts opened with the Russian depositaries are urged to consult the relevant Russian depositary on the specific procedures, deadlines, cut off times, fees and expenses and the documentation required, necessary or desirable for the share redemption, filing of share redemption or withdrawal requests and/or receipt of payments for the shares accepted for redemption.

GDR holders should be aware that they may have tax liabilities in Russia and other applicable jurisdictions in connection with the surrender and cancellation of the GDRs and taking delivery of the Company’s common shares represented by the GDRs and in respect of the proceeds received in connection with the redemption of the Company’s common shares. GDR holders are urged to consult their tax advisers at their own expense in respect of any potential tax consequences in connection with the foregoing.

If you are in any doubt as to what action you should take, you should immediately seek your own independent financial, tax and legal advice from your stockbroker, bank manager, legal advisor, accountant or other independent financial adviser.

Uralkali (www.uralkali.com) is one of the world’s largest potash producers and exporters. The Company’s assets consist of 5 mines and 7 ore-treatment mills situated in the towns of Berezniki and Solikamsk (Perm Territory, Russia). Uralkali employs ca.11,000 people (in the main production unit). Uralkali’s shares are traded on the Moscow Exchange.